Essay/Chapter 4. Cheque-invoice

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Chapter 4. CHEQUE-INVOICE


1. Features of the cheque-invoice
2. Description of the cheque-invoice
3. Working of the cheque-invoice
4. The currency question


In this chapter we submit a very specific suggestion on how could be the monetary instrument-document which is now so badly needed.

We have called it with the composite name cheque-invoice.


1. Features of the cheque-invoice

The essential features of the cheque-invoice, which make it a really pro-scientific and pro-justicial instrument, and a valid alternative to the present monetary instruments, are the following:

  • it is static, that is, it takes part in one only monetary act (whether a trade exchange, or a social-monetary act): it is issued for a given monetary act, and ends with it. It cannot be used ever again. This is the essential condition of any subsequent statistics.
  • it is diversified to the utmost and best way, in terms of the specific features of every market-monetary, or social-monetary act; so the possibility of a subsequent global analytics of the monetary market and society is vouchsafed.
  • it is personalized, that is it indicates the personality of the two market or social agents which use it as a monetary instrument: the one issuing it and the payee. This personalization is the effective guarantee of the full juridical responsibility of the said agents.

The monetary instrument showing these features will be an actual document, it will leave proof of all and each monetary act (market and social ones) taking place and will detail the features and implied agents.


2. Description of the cheque-invoice

The name cheque-invoice describes exactly the essence of the monetary instrument-document which we submit as a substitute of the present monetary instruments.

In fact, the cheque-invoice is only a piece of paper (which will have to be standarized at a geopolitical level) which will be simultaneously an invoice and a cheque.

As far as the invoice is concerned, it will indicate the place and date of the operation; it will specify the quantity and quality of the specific goods which are the object of the operation, their unit price and the total amount to be paid; it will also indicate the name of the seller's company.

As far as the cheque is concerned, this same document will indicate the customer's identity, the name of its accounting firm,[1] and the number of his current account, besides the accounting firm's name and the number of the supplier's current account.


3. Working of the cheque-invoice

The working mechanism foreseen for the cheque-invoice is the following:

  • every elementary monetary act (whether social-monetary, or market-monetary) implies two agents. In the more frequent case of the market-monetary act, that is the market exchange, or sales-purchase act, these two agents are called respectively «customer» and «supplier».
  • the customer is the one giving out the cheque-invoice. Every customer is a customer-debtor-drawee.
  • the supplier is the beneficiary of the cheque-invoice. Every supplier is a supplier-beneficiary.
  • the supplier-beneficiary will fill the cheque-invoice with the data previously indicated. The customer-debtor-drawee will sign it. It will be necessary to set the necessary mechanisms for checking the customer's identity.
  • the supplier-beneficiary will keep the original invoice; the customer-debtor-drawee will keep a copy of it.
  • the supplier-beneficiary is the only legal beneficiary of the cheque-invoice: that means that, in no case, will it be possible to endorse the cheque-invoice.
  • the supplier-beneficiary will deliver the cheque-invoice to his bank, which will instantly credit his current account with the indicated amount.
  • afterwards, the beneficiary's bank will send the cheque-invoice to the bank of the customer-debtor-drawee, and the corresponding debit will be noted in his current account.
  • after these operations have been noted down, the cheque-invoice will be neutralized, microfilmed and filed away for statistical and judicial purposes. Here ends the life of this cheque-invoice.
  • the cheque-invoice may imply a payment term according to law; in this case it will be advisable to foresee the necessary modifications of the procedure we have described above. In any case, however, the interest of the bank discount will be paid by the customer-debtor-drawee who needs to adjourn payment.
  • a complementary measure, which will confer great solidity to this system, would be the creation of an Interbank Fund to ensure the payment to the beneficiary of any cheque-invoice written out without cover. This Interbank Fund would be the only actor in justice against the insolvent drawee.


4. The currency question

The adoption of a monetary instrument as the one described, implies necessarily an important change in the monetary relations with foreign countries, with the geopolitical communities which do not share the same monetary unit.

The monetary relations with abroad are, now, of two very different sorts, in all the countries.

In the first place there is foreign trade.

For all the commercial operations with abroad —whether within a modus vivendi, or within a bilateral or multilateral trade treaty—, it will be necessary to establish special cheque-invoices for foreign trade (either import or export). This foreign trade cheque-invoices will always be worded in units of the foreign currency used: the foreign importer or exporter will pay or receive, according to cases, in that foreign currency: but this currency will go to (or come from) the Treasury, which will be the only one to have currency. The exporter or importer will not be allowed to have currency: in his current account there will be only amounts —credited or debited, according to cases— in domestic monetary units.

To carry out the exchange between the foreign currency and the domestic monetary unit —as long as the complete demonetization of gold in the whole world will not have been carried out— an arbitrary gold standard will have to be used, established by the monetary authorities, which will be compared to the gold price —in the foreign currency— in the free international market. From the relation gold-domestic monetary unit and from the relation gold-foreign currency, a relation domestic monetary unit-foreign currency will be inferred which will be used to carry out the translation in figures among the two.

Another alternative to carry out foreign trade will consist of the foreign agent accepting to pay, or be paid, in domestic monetary units. Then he will have to open a current account in an bank of the geopolitical community with cheque-invoice, and this current account will of course only be valid in this community. This will be the most current case when foreign tourism and foreign investments in our own country will be implied.

After foreign trade we have, in the second place, currency trade.

The first to be said is that this completely disappears in and for any geopolitical community which may have adopted fully the cheque-invoice system.

In fact, the essential feature of this system is that the monetary instruments are issued only to document an operation with a specific merchandise, and purposely for that. Therefore, there cannot be a movement of monetary units without a corresponding movement of specific goods. There cannot then be a movement of monetary units against monetary units. Nobody can buy nor sell currency. In fact, the domestic monetary unit is no longer currency, because it cannot be sold nor bought in any foreign —nor domestic— market.

Then, the State of any geopolitical community whatsoever, which has adopted the cheque-invoice, will not have to defend its currency against speculation, nor defend the parity of its own currency. So, speculation will become instrumentally impossible, and there will not be either any officially fixed parity, but the value of the monetary unit itself with respect to the foreign currencies will fluctuate freely, following the market evolution.

The details given on the specific working of the cheque-invoice show that this is a monetary instrument-document very accurate, agile, easy to introduce and privately issued.

We suggest then the suppression of all the present monetary instruments, both the main and the auxiliary ones, officially or private-bank issued, and their substitution by one only type of monetary instrument-document, the cheque-invoice, issued freely and privately by each market or social agent, well personalized and responsible, with the only limitation of its current account balance.



Notes:

1. Accounting firm: it may be a Business Bank or a Savings Bank (see chapter 12).